{"id":88070,"date":"2026-07-22T11:40:08","date_gmt":"2026-07-22T11:40:08","guid":{"rendered":"https:\/\/www.europesays.com\/britain\/88070\/"},"modified":"2026-07-22T11:40:08","modified_gmt":"2026-07-22T11:40:08","slug":"jefferies-upgrades-reckitt-to-buy-arguing-market-has-over-punished-transitory-setbacks-2","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/britain\/88070\/","title":{"rendered":"Jefferies upgrades Reckitt to buy, arguing market has over-punished transitory setbacks"},"content":{"rendered":"

\"Jefferies<\/a> Jefferies upgrades Reckitt to buy, arguing market has over-punished transitory setbacks Proactive uses images sourced from Shutterstock <\/p>\n

Jefferies has upgraded Reckitt Benckiser Group PLC (LSE:RKT, FRA:3RB, XETRA:3RB)<\/a>to ‘buy’ from ‘hold’, raising its price target to 5,900p from 5,600p ahead of half-year results next week. <\/p>\n

The broker argues the market has overly discounted a run of setbacks that hit the consumer goods group in early 2026, most of which it classes as one-off and unlikely to recur beyond this year. <\/p>\n

Reckitt shares have fallen around 15% so far in 2026, against an 8% gain for the broader European market, leaving the stock trading at 14.5 times forecast earnings compared with 18 times at the start of the year. <\/p>\n

Analyst David Hayes points to three “binary” events behind the first-quarter sales miss, when like-for-like growth came in at 1.3% against consensus of 3%. <\/p>\n

Changes to Russian sanctions rules on household goods removed roughly \u00a326 million of sales, while Chinese regulatory intervention in intimate wellness, including the imposition of VAT on condoms after a 30-year exemption and tighter advertising restrictions, cost a further \u00a312 million. <\/p>\n

A weak cold and flu season compounded the problem, with seasonal self-care sales down around 10% year on year. <\/p>\n

Strip those out, Jefferies calculates, and the remaining 80% of the business grew at 5%. <\/p>\n

The bank expects a formal guidance cut at the 29 July results, with core organic sales growth trimmed to around 4% from the current 4% to 5% range, and operating margin guided to just below last year’s 24.9%. <\/p>\n

It views that reset as a clearing event rather than a fresh blow, removing the uncertainty keeping investors on the sidelines. <\/p>\n

A second potential clearing event comes in late August, when a jury delivers its verdict in the latest bellwether case over necrotising enterocolitis claims linked to Mead Johnson infant formula. <\/p>\n

Jefferies continues to assume an \u00a3800 million total liability and believes the market already anticipates a verdict for the plaintiffs. <\/p>\n

Resolution of the litigation is seen as a prerequisite for the planned disposal of the Mead Johnson nutrition arm, which Jefferies values at eight times earnings before interest, tax, depreciation and amortisation, or roughly \u00a34 billion gross. <\/p>\n

The bank forecasts like-for-like growth of 4.5% at core Reckitt in 2027, a level it thinks could trigger a re-rating towards 15.8 times forward earnings. <\/p>\n","protected":false},"excerpt":{"rendered":"Jefferies upgrades Reckitt to buy, arguing market has over-punished transitory setbacks Proactive uses images sourced from Shutterstock Jefferies…\n","protected":false},"author":2,"featured_media":88071,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21355],"tags":[20606,13258,21399,21376],"class_list":["post-88070","post","type-post","status-publish","format-standard","has-post-thumbnail","category-reckitt-benckiser","tag-european-market","tag-jefferies","tag-reckitt","tag-reckitt-benckiser"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116963444285525814","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/88070","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=88070"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/88070\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/88071"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=88070"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=88070"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=88070"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}